The circuitry of protein tyrosine phosphorylation underlies may fundamental cellular processes, such as signal transduction, cell division, and differentiation. The primary components of these circuits are protein tyrosine kinase (PTKs) and protein tyrosine phosphatases (PTPs). A broad outline of the complex interplay between these enzymes is understood, but the details of this relationship, particularly regarding the PTPs, are only beginning to emerge. In general, most PTKs act as positive regulators of cell growth, while most PTPs act in an opposing manner. This behavior makes PTPs attractive candidates as potential suppressors of neoplastic transformation. The goal of this study is to examine the molecular mechanisms by which an abundant, prototypic intracellular PTP (PTP1B) regulates cell growth, with special emphasis on its ability to suppress transformation. We have found that transformation suppression by PTP1B depends not only on the catalytic activity of this enzyme, but also on the presence of an intact proline-rich sequence in its C terminus. This unexpected finding suggests that PTP1B dampens growth signals by binding to one or more key src-homology 3 (SH3) containing protein(s). These findings have wide-ranging implications for growth control and have completely altered our view of PTP1B's mechanism of action in the cell. Thus, we now propose a series of experiments to systematically explore the nature and scope of PTP1B's SH3-containing partners and their role in regulating cell proliferation. One such potential PTP1B target, the docking protein p130 cas, is thought to function in adhesion-regulated signal transduction. As we have shown that PTP1B binds to p130 cas in intact cells, we now plan to explore in detail the effects of this phosphatase on adhesion-regulated pathways. In addition, we will examine the effects of PTP1B on growth- factor stimulated proliferation, with special emphasis on SH3-containing adaptor proteins that are known to be required for such signaling. Finally, we will undertake a methodical survey of cell lysates to identify and eventually clone novel PTP1B partners, since these may represent additional key substrates for this enzyme. We anticipate that the insights gained from these studies of PTP1B will fill an important gap in our understanding of protein tyrosine phosphorylation and its role in cellular growth control. The results of the proposed experiments may also pinpoint key elements, from among the myriad changes in cellular physiology that occur as the result of oncogene expression, that are required for neoplastic transformation.